Feature

The Corn Conundrum

Rising corn prices will hurt the record margins that ethanol refiners now enjoy &ndash; and the generous valuations of their stock. Archer Daniels, the leading producer of the biofuel, is among those that look overpriced.

ETHANOL IS HAVING A BUMPER year. Prices for the corn-based gasoline additive have spiked, along with oil prices. Bountiful harvests have held down the cost of corn, the primary feedstock for making the grain alcohol. So ethanol refiners are enjoying booming sales and record profit margins. And Wall Street is throwing money at them all.

Shares of the nation's largest ethanol refiner -- the agri-giant Archer Daniels Midland (ticker: ADM) -- are up 68% this year (as anticipated in our story "Power by the Bushel,"...